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5 things to know about getting the best auto loan

5 things to know about getting the best auto loan

A lot of people still do not do much research on auto loans when purchasing a car. While people assume the dealership will provide you the best option that is definitely not the case 100% of the time. Below I have summarized 5 things to know about getting the best auto loan for yourself:

  1. Focus on the total purchase price rather than the monthly payment: You should always focus and negotiate on the total purchase price of the car rather than the monthly payment because the salesman can just lengthen your loan term to make it look like you are paying less per month. However, you are really paying more in total and in interest over the life of the loan. You should know what you can afford each month, but you don't need to provide that figure to the salesman.
  2. Know your credit score prior to entering the dealership: Your credit score is easy to obtain, but important to know prior to purchasing a car with an auto loan. This should give you a general guideline if you will be approved for an auto loan and what kind of rates you will be offered. In general, the more you know, the better prepared you will be in getting the best auto loan for yourself.
  3. Shop around for an auto loan: If you have a guaranteed auto loan already secured, this will give you some bargaining power and flexibility. You will also be able to compare the rate offered to you by the dealership. A dealership may be able to offer you the best financing terms, but you should still do your homework beforehand by carefully shopping for the best loan offers so you have a comparison point. You can obtain an auto loan through a variety of sources, such as local banks, credit unions, or online banks.
  4. Remember to say "no" a lot: Car salesmen are always going to try to add additional features to the car to try and increase its price. Focus on what you originally wanted and just say no kindly and repeatedly if necessary. Most of the add-ons are really there to make extra profit for the dealership so they are not necessary to your purchase unless you really want them or have room in your budget. 
  5. Research your choice between cash rebate and low interest rate loan: If you want to take advantage of a manufacturer's offer of a cash rebate or a low interest car loan, make sure you do your research before deciding. Each offer is typically unique so you may need to do some high level math analysis to see what the best choice is for you.
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Friday, 10 November 2017

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